PCG’s top health trends to look for in 2016

Year end is a time of reflection, and a time to plan for what’s to come. Here at PCG, our Health team has much to be proud of in 2015: we helped more than 40 states develop and implement health care reform and Medicaid policy that will impact millions of Medicaid members nationwide. And so we look ahead to 2016, and PCG Health’s leadership sees a few trends that we are keeping an eye on that we think will impact the Medicaid healthcare system in 2016, and for years to come. They include:

1. Continued rapid adoption of value-based purchasing across all payers and providers 

Medicaid payment reform and/or value based purchasing (VBP) will continue to be a priority for Medicaid agencies in 2016.  As a result of the Affordable Care Act (ACA), Medicaid programs across the country will continue to explore, test, and implement an array of transformative service delivery systems, from accountable care organizations, to patient centered medical homes, and performing provider systems.

“To ensure the long term sustainability of these innovative service delivery systems, the reimbursement models must be examined and turned upside down in order to realize the full promise these systems were designed to disrupt,” PCG Manager Matt Sorrentino said. “Volume based reimbursement systems are detrimental to the progress these service delivery systems have to offer, particularly to enhancing the quality of care and reducing unnecessary expenditures – such as, readmissions, complications, services, and/or providing care in inappropriate care settings.”

From bundles or episodes, to shared saving models, to total cost of care, it will be important for Medicaid programs to provide leadership and direction in determining the most appropriate reimbursement models for their programs. With the Centers of Medicare and Medicaid Services (CMS) committing to implement similar VBP models across the Medicare program, it is clear that this issue will remain a priority for the near future.

2. Drive toward transparency 

Tools designed to drive transparency will continue to gain prominence among consumers, regulators, payers, and providers. With high deductible health plan penetration continuing to rise alongside increases in Medicaid Managed Care, even more pressure will be put on providers and payers to report meaningful measures to consumers related to the cost and quality of care provided.

“Emerging tools will not only focus on directing consumers towards higher value care,” PCG Health Associate Manager Aaron Holman says. “The tools will also assist regulators in devising future reporting requirements for its state’s managed care providers, qualified health plan Carriers and across marketplace innovation programs like medical homes and other payment reform demonstration projects.”

3. Revenue pressures on states

As overall economic growth levels out nationally, many Medicaid programs will continue to struggle to fund or maintain the increased reimbursement levels that came into effect in 2015, or are proposed for 2016. Although actual spending per capita in 2014 was at a record low (-2% nationally) enhanced rates coupled with significant individual expenditures linked to Sovaldi and other high cost specialty pharmaceuticals, responsible for a nearly 12% increase in drug spending in 2014, will create pressure on program managers to control costs through traditional and alternative means. With mixed results emerging regarding short term costs savings associated with Medicare’s shared savings program, Pioneer ACO demonstration and other alternative payment efforts, Medicaid programs do not have a clear path towards driving high value care and trimming overall spending in the near future.

4. Focus on Medicaid eligibility through asset verification

A few years ago the Federal government made changes to the Social Security Act that required States to implement an electronic asset verification system (AVS) by the end of 2013 or risk losing matching federal funds for Medicaid long term care services (per Section 1940 of the Social Security Act).

“While CMS has been slow to enforce this rule, it appears that states will soon face additional scrutiny for failing to comply,” says PCG Health Manager Thomas Aldridge.

The House Energy and Commerce Committee began making noise about CMS’s failing to enforce this measure in a press release earlier this month. Additionally, this month CMS announced that enhanced funding for eligibility and enrollment system improvements (90% FFP) and maintenance and operations (75% FFP) would continue through next year. Several states have successfully realized this enhanced funding for AVS implementations already, including North Carolina, Oklahoma, Florida, Maryland and New York.

5. Behavioral Health becomes even more central to delivery system and reimbursement reforms

Delivery system changes will continue to focus on the integration of behavioral health and primary care. This is absolutely necessary, as primary or underlying behavioral health conditions play a major role in high-utilizing populations, but it will put pressure on the behavioral health system and its providers.

“Behavioral health providers will be increasingly required to play a role in value-based purchasing methodologies, which will require the use and analysis of claims and clinical data,” says PCG Associate Manager James Waldinger. “Behavioral Health providers need to get a seat at the table as these important changes are made.”

Getting a seat at the table, being able to negotiate contracts with managed care organizations (MCOs), and carving out its distinct role in the system will be a challenge and opportunity for behavioral health providers in 2016.

6. Continued move toward community based services

The move to lower the cost of care will include increased emphasis and creative solutions to provide health care services in the home.  This trend will have broad impact for health systems on how they arrange the delivery of care, as well as for hospitals on how they continue to expand their reach into providing and coordinating with services provided outside of the traditional hospital setting.

“Along with the expansion of services into the community setting, there will be a growing need to place improved technology in the hands of consumers and care givers,” PCG Health Manager Rick Dwyer says.

In this way clinical data will be collected and communicated in a timely manner, and complete and accurate information of the patient condition, as well as treatment effectiveness and outcomes, will be more readily available and more robust.  The data collected in the community setting will also need to be transferred and incorporated into larger Electronic Health Care (EHR) systems, not only for better care management but also for broader analysis of overall patient care effectiveness and the measurement of quality of care.

“Improvements in the availability and integration of technology and data sets will be a continuing challenge for community based services during 2016,” PCG Health Manager Sean Huse says.

The dynamic nature of the healthcare industry will continue to evolve throughout 2016. It’s important for Medicaid agencies and providers alike to stay tuned into this fluid environment. Be sure to check in with PCG Health to keep abreast of CMS and other industry news.

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